W5 Lecture 4

Question 1

Why r pricing so important

Answer 1

• Pricing is the only revenue generating element of the marketing mix
• Price has a strong effect on sales volume
• Effect is manifested much faster than other mix elements.
• Price can be modified relatively quickly
• Competitive reactions faster & more intense to price changes than to other marketing mix variables.

Question 2

Steps in Setting Price

Answer 2

Select the price objective
Determine demand
Estimate costs
Analyze competitors
Select pricing method
Select final price

Question 3

Common Pricing Mistakes

Answer 3

Being too cost-orientated (- determine costs
and take traditional industry margins) rather
than being value-orientated.
 Failure to revise price to capitalize on market
changes.
 Not gauging adequately when to follow or
ignore competitors’ price changes.
 Setting price independently of the rest of the
marketing mix.
 Failure to vary price by product item, market
segment, distribution channels, and purchase
occasion.